Global oil prices have risen ahead of the meeting of the Organization of the Petroleum Exporting Countries (Opec), a de-facto cartel of 14 oil producing nations, led by top exporter Saudi Arabia, on Friday. Some non-Opec members including Russia will also participate in the to discuss the output policy at headquarters in Vienna.
The world is waiting to see whether the Opec will decide to increase crude oil production at its meeting.
Top Facts to know about OPEC meet
- Russia is not a part of OPEC, but is the world’s largest oil producer along with Saudi Arabia.
- Opec accounts for around 40% of global production, any decision will have a wide-ranging impact on energy markets.
- In December 2016 Russia and OPEC reached a deal to cut oil production by 1.8 million barrels per day (bpd), which led to a three-fold increase in oil prices till date.
- Now Russia wants an immediate increase in output with the option to recalibrate later.
- Reports suggest that OPEC might increase supply by 500,000 to 600,000 barrels per day (bpd), significantly less than the 1.5 million bpd that Russia wants.
- OPEC members including Iraq, Iran and Venezuela do not have spare capacity like Saudi or Russia, and do not want enhanced limits.
What it means for India?
- India is the third largest consumer of oil in world. More than 80 per cent of the oil is imported, most of it from Opec.
- Crude oil prices impact India’s oil import bill and trade deficit. While lower oil prices improved India’s terms of trade in 2015-16, the average cost of the Indian crude basket rose to $75.31 per barrel in May 2018, according to data from the Petroleum Planning & Analysis Cell.
- Retail prices of crude are broadly linked to crude oil price trends.
- India has made plea a conclave of ministers to increase the supply. High prices are a “pain”, and appealed for “reasonable” pricing.
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